National Advertising in Newspapers [Reprint 2014 ed.] 9780674188938

Citation preview

NATIONAL ADVERTISING IN NEWSPAPERS

LONDON: GEOFFREY CUMBERLEGE OXFORD UNIVERSITY PRESS

NATIONAL ADVERTISING •IN·

NEWSPAPERS NEIL H. BORDEN PROFESSOR OF

ADVERTISING

Graduate School of Business Administration

HARVARD

UNIVERSITY

MALCOLM D. TAYLOR PROFESSOR OF

UNIVERSITY

MARKETING

OF N O R T H

CAROLINA

HOWARD T. HOVDE ASSISTANT

PROFESSOR OF

MARKETING

W h a r t o n School of Finance and C o m m e r c e

UNIVERSITY

OF

PENNSYLVANIA

HARVARD UNIVERSITY PRESS CAMBRIDGE

1946

COPYRIGHT,

1946

B Y THE PRESIDENT AND FELLOWS O F HARVARD COLLEGE

PRINTED I N T H E UNITED STATES OF AMERICA

FOREWORD

ADVERTISING has a significant opportunity to aid in American industrial development in the future. It has played a prominent part in facilitating industrial development in the past, and the task ahead is no less challenging. By acquainting consumers and industrial buyers with the merchandise and services available and by stimulating latent demand, advertising expands markets. T h u s it contributes to an expanding economy and helps to provide employment. It constitutes a business force which, if fully and properly utilized, can contribute materially to American progress in the years ahead. Since newspapers constitute one of the major advertising media in the United States, our research division welcomed an opportunity to undertake a comprehensive study of the problems involved in the use of newspapers in national advertising. T h e Boston HeraldTraveler Corporation, of which Mr. Robert Choate is publisher, was interested in having a broad study of that subject made and contributed the funds to defray the costs of the project. W e are sincerely grateful to Mr. Choate and to his company for their support of the project. Professor Neil H . Borden has been in charge of the work on the project, and associated with him have been Professor Malcolm D . Taylor, on leave of absence from the University of North Carolina, and Professor H o w a r d T . Hovde, on leave of absence from the University of Pennsylvania. T h e results of their work are presented in this volume. In order to ascertain how newspapers can render the maximum service in national advertising programs, the authors have given especial attention to the major problems which newspapers encounter in that field. Their frank and painstaking analysis of those problems indicates at least some of the means by which newspapers can effectively play their part in the promotional tasks which American industry now faces. M E L V I N T . COPELAND

Director of Research Soldiers Field Boston, Massachusetts November, 1945

[v]

PREFACE THIS volume is addressed primarily to newspaper publishers. It is a study of one of their most pressing problems. For 15 years an important source of revenue—national advertising—has experienced an adverse trend. What can publishers and their business and advertising executives do to remedy this situation; what do newspapers have to offer national advertisers; and how can these newspaper advertising values be effectively conveyed to the advertiser and his agency by newspaper selling organizations Ρ These questions indicate the approach taken in our research. It is our hope that this study of the media-buying attitudes, of attitudes of advertisers and their agencies, and our analysis of newspaper selling methods may be helpful to publishers and their business and advertising executives. T o many of them we shall probably reveal few things unknown, but we trust that a systematic and integrated presentation of facts of the market and the marketing methods of newspapers among national advertisers may be of value. Exploratory work on this project was started by Professor Borden late in the fall of 1943. He laid out the project and was joined by Professor Taylor in April, 1944, and Professor Hovde in July, 1944. T h e extensive field work and the various questionnaire studies were carried out jointly by the three authors. Analysis of the large mass of material gathered started in January, 1945, with the various parts of the project parcelled among the three. In July, 1945, Professors Taylor and Hovde left to join the American Army University Center at Biarritz, France, and Professor Borden assumed the task of making an integrated whole of the manuscript and the analyses of the three. Unfortunately, Professors Taylor and Hovde have not had opportunity to give detailed criticism or editorial suggestions regarding all of the manuscript as it is published, because of their absence in France. Chapters I to V I I I inclusive, written by Professor Borden, and Chapters X V I to X V I I I inclusive, written by Professor Taylor, were read and approved by all three. T h e remaining chapters, written after the departure of Professors Taylor and Hovde, while not receiving their criticism, are believed to present their viewpoints as determined from long work together on the project and from their notes. Professor [vii]

Preface Borden, however, alone must assume whatever criticisms may be advanced regarding these chapters. Grateful acknowledgment is due many persons for aid in one way or another. Mrs. Ruth C. Hetherston carried out important assignments in assembling and analysing statistical material. Miss Grace V . Lindfors adjusted accounting data relating to the income and expenses of 76 publishers who submitted operating figures for the year 1941. Mrs. Margaret C . Auerdahl and Miss Sadie E . Hayes bore the chief secretarial duties during the study. Assistant Professor James W . Culliton, Miss Ruth Norton, and Miss Esther Love gave valuable editorial assistance and prepared the manuscript for the printer. T o Professor Melvin T . Copeland, Director of Research, w e are indebted for many valuable suggestions. T o the many executives of newspapers, special newspaper representative firms, manufacturing companies, and advertising agencies who gave generously of their time and effort in providing us with needed information w e are particularly grateful, for without their help the job could not have been done. Finally, to Mr. Robert Choate and the Boston Herald-Traveler Corporation we express our thanks for having made the study possible. N E I L H . BORDEN

who signs also for the joint authors MALCOLM D . TAYLOR H O W A R D T . HOVDE

Soldiers Field Boston, Massachusetts November, 1945

[ viii ]

CONTENTS CHAPTER I

PAGE NEWSPAPERS IN A D Y N A M I C W O R L D

3

Changes affecting newspapers. Reasons for studying national newspaper advertising. Problems faced by newspapers. Questions studied. Competition for consumers' time. Evidence of magazine readership; of newspaper readership. Value of readership studies in building the product. Arrangement of the book.

PART I A

S T U D Y

O F

T H E

M A R K E T

N E W S P A P E R

II

F O R

N A T I O N A L

A D V E R T I S I N G

C H A R T I N G O U R C O U R S E I N A S T U D Y OF T H E M A R K E T .

.

21

Research method followed. Importance of advertisers' attitudes. Place of the advertising agency. Order of presentation in the chapters ahead. III

S O M E STATISTICS ON THE C H A N G E S I N N A T I O N A L

NEWS-

PAPER ADVERTISING

29

Total advertising expenditure and national income. Distribution of advertising expenditures among media. Analysis of national advertising by product groups. Concentration of radio network advertising among large advertisers. Summary of trends of advertising expenditure. T h e prospects ahead. IV

A T T I T U D E S AND M E D I A PRACTICES OF L A R G E USING

COMPANIES

NONSELECTED DISTRIBUTION

Changing use of newspapers. Substantial use of visual media. Attitudes. G r o w i n g use of market research in selecting media. Illustrations of media selection by advertisers. Convictions regarding media effectiveness. Anticipation of changes in radio advertising. Attitudes of advertising agencies. Significance of trend toward objective evidence.

67

Contents CHAPTER V

PAGE NEWSPAPERS

AS

A

SUPPLEMENTARY

SPECIAL-

AND

OBJECTIVE ADVERTISING MEDIUM OF COMPANIES USING NONSELECTED DISTRIBUTION

89

Importance. Use as a reinforcing m e d i u m ; for intensification of selling in selected markets; for local promotions. Newspaper campaigns for seasonal sales drives; for opening markets; for test campaigns. Miscellaneous uses. Volume of advertising from special uses. VI

NEWSPAPERS AS THE BASIC ADVERTISING MEDIUM OF COMPANIES USING NONSELECTED DISTRIBUTION . . . . A company using newspapers as a basic m e d i u m over a long period of years. Another recently selecting newspapers as its basic medium. Regional use of newspapers. Importance of regional advertisers to newspapers. W h a t is an adequate newspaper schedule? N e e d for objective evidence to keep advertisers convinced. Advertisers' willingness to use newspapers.

VII

107

T H E USE OF NEWSPAPERS BY COMPANIES USING SELECTED DISTRIBUTION

148

Selected distribution. Advertising strategy. Advertising practices. Appropriations of these companies. T h e i r usage of newspapers. Problems of dealer cooperative advertising. Courses of action open to newspapers. T h e period ahead. VIII

OTHER NEWSPAPER ADVERTISERS

173

Transportation companies. Hotels and resorts. advertisers. Publishers. L i q u o r advertisers. IX

Industrial

SUMMARY OF THE MARKET FOR NATIONAL ADVERTISING IN

NEWSPAPERS

183

PART I I THE

MARKETING

OF NEWSPAPER

NATIONAL X

CHARACTERISTICS

SPACE

AMONG

ADVERTISERS

OF NEWSPAPERS

WHICH

INFLUENCE

THEIR MARKETING Purpose of Part II. Source of facts. Purpose of this and next chapter. Atomistic character of the newspaper in-

I

93

Contents CHAPTER

PAGE

dustry. Large unit size of competing media. Relatively small units of sale. Distribution through special representatives. XI

THE

EFFECTIVENESS

SPACE — A

OF

NEWSPAPERS'

MARKETING

OF

SUMMARY V I E W

203

Reputation for effectiveness not good. Emphasis on intraindustry competition. Primary selling by competing media. Newspapers' customer relations. Newspaper rate structure. Cooperative efforts to strengthen marketing. Regional groups of newspapers. Selling of newspaper supplements and proposals for selling fixed groups. XII

T H E SELLING PROCEDURES OF NEWSPAPERS

225

Organization of individual newspapers for selling. Research and promotion. Chain newspapers. Home office, national selling staffs. Contacts with advertisers' regional sales managers and distributors. Pressure selling. Contacts with advertisers' headquarters and their agencies. Personnel responsible for media decisions. The part of the agency in formulating advertising plans. Restriction on calls of newspaper solicitors. Testimony of special newspaper representatives on selling contacts; of advertisers; of agencies. Basis of access to agency account executives and principals. Summary of newspaper selling contacts. XIII

BASES FOR IMPROVING SALES PROCEDURES

255

Need for primary selling; its value. The caliber of newspaper salesmen. Recruiting and training of salesforces. The use of visual aids. Need for stories of sales success. Development of sectional advertisers. Promotion of national newspaper advertising. XIV

BRANCH OFFICES AND SPECIAL REPRESENTATIVE F I R M S .

Location of advertising agencies and national advertisers; of newspaper selling offices. Extent of direct selling. Determinants of direct selling. Special representative firms. Nature of contractual agreements. Number of papers handled. Varying character of efforts. Research and sales guidance. Compensation. Its adequacy. The homogeneous list for small circulation newspapers. Selling problems of small papers. Sale of newspapers without representation.

[xi]

276

Contents PAGE

CHAPTER X V

COOPERATIVE SELLING BY GROUPS OF NEWSPAPERS .

.

.

310

Selected state and regional associations. Appraisal of cooperative selling efforts. Proposed program for the expanded Bureau of Advertising. Suggested services of the Bureau. Relationships between the Bureau and newspapers. Attitudes toward fixed groups. Previous efforts at package selling. Further studies being conducted. Summary. X V I

NEWSPAPER RESEARCH: STUDIES CARRIED ON BY

NEWS-

PAPERS

350

Types of newspaper research studies. Market data presentations. Product-penetration studies. Home inventory studies. Special studies. Research by small market newspapers; by large market newspapers. Cooperative research by newspapers. Research by Sunday supplements. Use of research studies by salesmen. XVII

NEWSPAPER RESEARCH: APPRAISAL OF ITS EFFECTIVENESS

390

Appraisal by advertising agencies; by advertisers. Standardization. Conclusions. XVIII

T H E MERCHANDISING SERVICES OF NEWSPAPERS

.

.

.

.

405

Types of services offered by newspapers. Examples of papers offering wide range of services. Merchandising services of cooperative groups. Types of services most in demand. Opinions on free merchandising services. Standardization. Attainment of standardization. XIX

PROBLEMS OF R A T E STRUCTURES

432

Evolution of national newspaper rates. T h e force of costs. Charge to the reader. Evolution of the local-national rate differential. Variation in the level of newspaper rates. Variation in millines of papers of similar size. T h e trend of newspaper rates. T h e trend of magazine and radio network rates. Level of rates for a national list. Quest for figures on costs of impression. Elasticity of demand. Effect of wide variations in price. Strategy of pricing. Forced combination purchases. Volume and frequency discounts. Summary. SOURCE

REFERENCES

471

477

INDEX

[xii]

EXHIBITS NO.

PAGE

ι . National, Local, and Total Newspaper Advertising Volume, Estimates, 1920-1943 (chart)

7

2. Total Advertising Volume and National Income, Estimates, 1920-1943 (chart)

30

3. Advertising Activity and Industrial Production, (chart)

1920-1944 32

4. Advertising Activity in Five Major Media, 1920-1944 (chart)

34

5. Expenditures of National Advertisers in Pool of Five Major Media, Estimates, 1929-1943 (chart)

36

6. Estimates of Change in Newspapers' Share of National Advertising Pool of Four Major Media for Selected Commodity Groups, 1929 and 1941 Compared 38-4° 7. Degree of Concentration of Expenditures in Three Major Media Compared, 1940

51

8. National Advertising Pools of Four Major Media, Estimated Expenditures of National Advertisers by Selected Commodity Groups (charts) 57—66 9. Six- and Seven-Day Newspapers Classified by National Advertising Linage and Size of City, 1941

103

10. Number of Grocery Advertising Accounts Using Newspaper Space in 104 Cities Ranked by Population . . . . 104-105 1 1 . Distribution of General Advertisers in Selected Product Classifications by Annual Linage in " A " Schedules, 1940 . .

129

12. Selected Data Regarding the Intensity and Continuity of 17 Cereal Breakfast Food Campaigns in The Washington Star, 131

1939 13. Average Annual Linage, Size of Advertisements, and Number of Insertions Run in The Daily Oklahoman by Various Classes of General Advertisers, 1938

133

14. Distribution of Expenditure Pools of Six Groups of National Advertisers Employing Selected Retail Distribution, Among Four Major Media, 1941

154

15. Distribution of 72 Companies Studied by Scott According to Size of Total Advertising Appropriation and Percentage Devoted to General Advertising over the Manufacturer's Name

157

[ xi" ]

Exhibits NO.

PAGE

16. Distribution of 36 Companies Interviewed during Newspaper Study According to Size of Total Advertising Appropriation and Percentage Devoted to General Advertising over the Manufacturer's Name

158

17. Estimated Net Revenue of 30 Leading Newspapers from National Advertising, 1941

197

18. Gross Space Sales and Estimated Net Revenue of 17 Leading Magazines from National Advertising, 1941 . . . .

200

19. Types of Evidence Needed and Executives to be Reached in Primary and Selected Selling of Newspapers . . . 258—260 20. Appraisal of Newspaper Research Studies by 92 Advertising Agencies

391

21. Rank of Newspaper Research Studies in Order of Usefulness to 92 Agencies Classified According to Size 22. Appraisal of Newspaper Research Studies by n o Advertisers

394 .

396

23. Rank of Newspaper Research Studies in Order of Usefulness to n o Advertisers

399

24. Analysis of "Merchandising Practices" of N . A . E . A . Member Newspapers Classified by Circulation

406

25. Variations in Milline Rates of Weekday Newspapers Classified by Circulation, 1944

441

26. Variations in Unit Costs of 69 Newspapers Classified by Circulation, 1941

442

27. Variations in Maximilline Rates of Lowest Cost Weekday Newspapers in Similar Markets, 1944

444

28. Median Maximilline Rates of Weekday Newspapers Classified by Geographical Section and Size of Market, 1944 . . .

445

29. National Milline Advertising Rates of AU U. S. Newspapers, 1929-1944

446

30. National A'dvertising Linage of 898 Weekday Newspapers Classified by Milline Rate, 1941

454

3 1 . National Advertising Linage of 208 Weekday Newspapers Classified by Milline Rate, Selected Years, 1928—1939 .. .

456

32. Average National Advertising Linage of 208 Weekday Newspapers Classified by Size of City and Milline Rate, Selected Years, 1928-1939

457

[xiv]

NATIONAL ADVERTISING IN NEWSPAPERS

CHAPTER I

Newspapers in a Dynamic Changes Affecting

World

Newspapers

ALL businesses must constantly adapt themselves to a changing world if they are to prosper as businesses and if they are to fulfill their responsibility to the community. The world as it has touched newspaper enterprises has been particularly dynamic during the past two decades, and publishers consequently in recent years have had especial need closely to study their medium and its relations with readers and advertisers. The most important dynamic force affecting newspapers has been the advent of radio, which has challenged newspapers not only as a seller of news and entertainment but as an advertising medium. Radio has grown and become firmly entrenched in the lives of the people. In 1922 there were only 60,000 homes with radio sets; by 1929 there were 9,000,000; while the 1940 U. S. Census of Housing indicates that 28,832,000, or 82.8% of the 34,865,000 families in the nation as of April, 1940, had one or more receiving sets.1 The Survey of Consumer Requirements, made by the Bureau of the Census at the request of the War Production Board, supports belief that in 1943 over 90% of American homes had radios.2 Numerous studies of listening indicate that radio sets, on the average, have been in use between four and five hours a day.3 Truly, living has been altered; consumers' time for other pursuits has been affected. Meanwhile the movies and the automobile, which had started many years previously to make their bid for consumers' time, have continued to hold their own. Twenty years ago weekly attendance at movies was in the neighborhood of 40 million. In 1930 it rose to a peak of n o million, only to fall to 60 million in 1933. But since that date attendance has risen until it was in the neighborhood of 95 million in 1943.4 The number of passenger automobiles rose sharply during the twenties, until in 1929 the ratio of passenger car registrations to number of families was 0.84.8 The ratio fell in 1933 to 0.72, but a steady increase thereafter brought it to 0.89 in 1941. Data on gasoline [3]

National Advertising in Newspapers consumption up to the outbreak of World War II indicate an upward trend over the years in annual mileage and, accordingly, in time spent outside the home. Then during this period there has been the growth of a group of aggressive magazines, particularly news magazines, which have challenged newspapers both on the news front and on the advertising front. In addition to these general trends other forces were also affecting the advertising revenue of newspapers. Like all other media, newspapers were subjected during the thirties to wide fluctuations of economic activity. All advertising expenditures were reduced not only as a result of lower sales volume, but also because advertisers devoted a reduced percentage of this volume to advertising; and, reflecting the growth in new media, newspapers received a smaller percentage of the total expenditure than previously. Furthermore, the practice of advertising has gone through significant changes. The so-called sellers' market that existed roughly up to 1921 did not call for refinement in selling and advertising techniques among advertisers and their agencies. In comparison, the period since has witnessed marked advance in efforts by marketers to get objective data on which to base their marketing decisions. Particularly has the past decade seen a rapid growth in marketing and advertising research, in sales planning, and in marketing control procedures.6 This changing viewpoint of advertisers and agency practitioners has called for a shift in the selling methods of media. Media managements have needed to become research-minded. They have needed to study what should be done by themselves and advertisers to make their media effective. There has been need for supplying better evidence of circulation, of consumer readership or listening, and of consumer response to the media. Managements which failed or were relatively less skillful in making this change in selling approach fell behind in the competition for the advertisers' dollar.

Reasons for Studying National Newspaper Advertising ONE evidence of the impact of these forces upon newspapers is a sharp decline in newspapers' revenue from advertising which, between 1929 and 1941, dropped 2 8 % . The significance of this drop is further increased when it is realized that in these two years, 1929 and

[4]

Newspapers in a Dynamic

World

1941, the total amount spent for advertising in all media was practically equal. This research study seeks to determine why the decline in expenditure for newspaper advertising has come about and to explore the significance of the facts, especially to the management of newspapers. T h e lack of sufficient time to study the whole problem, the difficulty of getting significant data, and the practical benefit of reaching some conclusions early made it desirable to limit the study to a workable but realistic part of the whole problem. The varied source of newspapers' advertising revenue made this possible. Newspapers' advertising revenue may be grouped in three categories, local, classified, and national. Dollar-wise, local advertising was roughly twice as large as national in 1929 and three times as large in 1941. Revenue from all classes declined between these two years but national advertising revenue declined much more drastically than local and classified. These facts are summarized in the following table: NEWSPAPERS' ADVERTISING REVENUE

1929 and 1941 (In millions of dollars) 1929 Source of Advertising Revenue

Local & Classified National

Amount

Î549 278 $827

Change from 1929 to 1941

1941 %of Total

66% 34 100%

Amount

$429 162 $591

%of Total

Amount

72% — $120 -116 28 100% - $ 2 3 6

% — 22% -42% -28%

T h e picture for each of the years from 1920 through 1943, shown in Exhibit 1, tells the same story. Although local advertising is far more important as a source of revenue to publishers than is national advertising, this study is limited to a consideration of national newspaper advertising. A study of the problems of local advertising would be a major project in itself. In turn, national advertising is important in its own right and has been of particular concern to newspaper executives. Hence the task undertaken in this research has been limited to the problem of national newspaper advertising.

[5]

National Advertising in Newspapers Problems Faced by Newspapers As is true in any dynamic business situation, the forces back of such an adverse income trend as newspapers have experienced are probably many. Understanding of the problem calls for research along the lines ordinarily involved in any diagnostic marketing inquiry, namely, a study of the product in the light of changing competition and changing consumer desires, of its market both among consumers and among advertisers, of the selling and promotion devoted to it, and of its pricing. In short, if publishers are to find means of maintaining newspapers as a leading advertising medium, they must seek answers to four groups of questions: ( 1 ) Those relating to the product; i.e., the adaptation of newspapers in editorial and news make-up to the changing needs and desires of the two sets of buyers of newspaper service: of consumers on the one hand; and of advertisers on the other hand. (2) Those relating to the market for newspapers in competition with other advertising media; i.e., questions regarding changing attitudes and practices of national advertisers in their use of media. (3) Those relating to the effectiveness of the marketing; i.e., the selling and promotional policies and practices of the newspaper industry. (4) Those relating to the pricing of newspaper -advertising in competition with other media. These groups of questions or problems are not mutually exclusive. They are, in fact, highly interdependent. For example, national advertisers' attitudes toward newspapers are affected by the skill or lack of skill of newspaper publishers in putting out a medium which consumers read and trust, the aggressiveness and skill with which they sell and promote their medium among advertisers, and finally, their pricing of it. Yet for purposes of investigation and exposition it is advisable to break the over-all problem down along the lines of study of the product, of its market, of its selling and promotional methods, and of its pricing.

[6]

Newspapers in a Dynamic

World

EXHIBIT I

National, Local, and Total Newspaper Advertising Estimates, 1920-1943 Millions 900

Volume

of Dollars

ÔOO

700

600

500

400

300

200

100

0

mo

mi

mo

/sjj

mo

The figures are estimates based on data from the following sources: Reports of the Census of Manufactures (figures modified to allow for nonuniformity of publishers in reporting agency commissions). Bureau of Advertising, American Newspaper Publishers Association, ExSOURCES:

penditures of National Advertisers in Newspapers, 1915-1938. Media Records, Inc., Ten-Year Analysis of Newspaper Advertising in 100 Major Cities, 1929-1938.

Bureau of Advertising, American Newspaper Publishers Association, Expenditures of National Advertisers ( A n n u a l Issues).

Printers' Inkj Indices of Newspaper Advertising.

[7]

National Advertising in Newspapers The Questions Studied in This Inquiry IN planning our inquiry we recognized that it was patently impossible to make an extensive study of all these possible areas, for the funds and personnel at our disposal could well have been devoted to intensive study of any one of several individual questions met in one of the areas. T h e task faced was that of making our inquiry broad enough to get a sweep of the forces operating. If answers to many of the detailed problems could not be determined, it was hoped that at least enough evidence might be marshalled to point the general direction in which newspaper publishers might move to maintain their position as a national advertising medium. W e decided to center our investigation primarily on questions relating to the changing usage of newspapers and other media by national advertisers and to the policies and practices of the newspaper industry in selling and promoting their medium to national advertisers. T h e chapters ahead deal primarily with these questions. Some evidence regarding the problems of pricing newspaper space was gathered and is discussed in Chapter X I X . Questions involving the editorial and news make-up and the format of newspapers were not given appreciable research, not because they were deemed unimportant, for indeed they are perhaps more fundamental than the problems we have investigated. T h e y call for continuous study and action by the industry. N o newspaper publisher can afford to overlook the changes necessary in the medium to meet new competition in communication and entertainment, particularly that from radio and news magazines. Nor, if he is to seek advertising revenue, can he be callous to the effect of newspaper format and make-up on reader attention to advertising. Our decision was dictated rather by the difficulty and complexity of the problems and the desirability of exerting our efforts in those areas for which our training and background best fitted us. Nevertheless we wish to make certain observations on these questions, relating to newspapers as a product, drawing on printed evidence available and information picked up in field work.

Competition for Consumers' Time NUMEROUS forces have brought changes in the living habits of American families and have had some influence upon their reading

[8]

Newspapers in a Dynamic World habits. T h e competition of the movies, the automobile, and the radio for consumers' time has been mentioned. Other forces, however, have operated in favor of reading and have undoubtedly tended to offset the adverse effects of automobiles, radio, and the movies. For instance, the average hours of work have had a consistently downward trend over a long period. Whereas in 1914 the average factory work-week was 51 hours, it had fallen to less than 40 hours by 1940. Again, labor-saving devices in the home and on the farm have reduced drudgery and given free time for reading or other pursuits. Still again, the desire to read has probably been increased by the higher educational level attained by our people. The number of persons receiving high school and college training has risen consistently over the years. What is the final result of these various forces on the reading habits of people? Do they spend as much time reading newspapers and magazines as previously? Do they give advertisements as much attention in recent years as they did before these various forces had reached their present state? In studying newspapers it is not enough merely to ask whether people read as much as formerly, but do they read newspapers as much ?. And in this connection it is necessary to note that newspapers as a vehicle of news have been subject to direct competition from radio and the news magazines. 7 Radio broadcasting companies have publicized research data indicating a high reliance of consumers on radio as their source, not only of up-to-the-minute news, but also of news interpretation by commentators. News magazines have shown an impressive growth in circulation, based on an editorial formula of summarizing and interpreting the news. T o what extent has this direct competition in the news field cut into consumers' readership of and reliance on newspapers ? During our extensive field interviews we found frequent evidences that such questions regarding newspapers are in the minds of advertising agency executives and advertisers. In their selection of advertising media they have been trained traditionally to look for evidence of readership, of the degree of exposure of a periodical's pages to the readers' eyes. They have been trained to determine through study of editorial matter and through consumer research the hold that any periodical has on its readers. Magazines and newspapers have heightened advertisers' alertness to readership, for

[9]

National Advertising in Newspapers through promotion and selling they have sought to give assurance not only of circulation but of high readership and of a reader following and confidence. In the last decade the growing use of listenership and readership studies has undoubtedly had a profound effect on media selection. Advertisers have been more and more prone to turn from a mere study of costs of circulation to a study of the costs of advertisements being heard or seen or read. Hence it is essential that newspaper publishers keep ever in mind the importance of providing a medium for which there is objective evidence of a high degree of readership and of an effective hold upon its readers.

Evidence of Magazine Readership THE answers to questions of any trends in reading time devoted to periodicals in general and to newspapers in particular cannot be given with assurance, for dependable and comparable data on the reading habits of people over a considerable period of time do not exist. On the other hand, there is a growing tendency on the part of the managements of various media and advertisers using those media to attempt to measure readership. These readership studies are important both because they are being developed as new tools and also because they present indirect evidence which shows that both newspapers and magazines continue to be vital forces in the lives of Americans and that a substantial readership exists. The trend of magazine circulation has been generally upward over a long period of time. A loss in the early thirties was quickly regained and new highs attained both in actual numbers and per capita. A good index of the circulation of magazines carrying advertising is found in the circulation figures of A B C magazines* listed in the consumer magazine section of Standard Rate & Data Service. These include the great bulk of leading periodicals with paid circulation. They account for a predominant percentage of magazine advertising linage. While the number of A B C magazines has not been constant from year to year, a similar fluctuation in number of periodicals will be found in any U. S. Census classification of periodicals and unfortunately no all-inclusive classification of consumer magazines is given in the Census. •ABC magazines arc those whose circulations are audited by the Audit Bureau of Circulations.

[10]

Newspapers in a Dynamic World The growth of circulation of A B C consumer magazines as related to population is shown in the following figures8 for selected years : Year

Total Average Nel Paid Circulation Per Issue

1929

60,596,249

0.50

r

933

53,660,887

0.43

1937

74.33 ! . 7 2 1

°·58

1940

86,374,999

0.64

Average Per Capita Circulation

A tabulation by Magazine Advertising Bureau9 of all magazines appearing in the "General and Farm Magazine Section" of Standard Rate & Data Service for the years 1929, 1933, 1938, and 1943 shows the following growth of magazine circulations : Year

Total Average Circulation Per Issue

Average Per Capita Circulation

1929

88,900,000

1933

88,500,000

O.73 0.70

1938

113,900,000

0.88

I943

163,200,000

1.22

Numerous studies10 of magazine readership over the years have indicated that magazines are received regularly in about 75% of all homes, with a lower coverage among low income groups than among high income groups. The range of coverage has been reported to be from about 40% for families with income under $1,000 to over 90% for families with income in excess of $5,000. To what extent the increased circulation in recent years has meant penetration to new homes, and to what extent a larger number in homes already buying magazines, is not known. But clearly the increase in magazine circulation indicates that the growing pressure of other interests has not decreased the interest of consumers in this most leisurely read medium. Evidence of Newspaper

Readership

DURING the twenties newspaper circulation grew faster than did population. In the early thirties, as radio flourished and depression deepened, newspaper circulation fell appreciably, but increases thereafter returned per capita circulation close to the 1929 high where it remained until the advent of war. Then circulation jumped ahead to new per capita levels under the stimulus of war news and in-

[11]

National Advertising in Newspapers creased incomes, even though subscription prices were raised. These facts are shown in the following selected figures for English language daily newspapers of general circulation in the United States: 11 Year

Average Daily Net Paid Circulation

Average Daily Circulation Per Capita

1920 1925 1929 r 933 I 935 r 937 x 939 1941 Γ 943

27,790,656 33.739>369 39,425,615 35.175.138 38,155,540 41,418,730 39,670,682 42,080,391 44,392,829

0.261 0.291 O.324 0.280 0.300 O.322 0.303 0.316 0-33 1

The story of circulation trends is much the same for Sunday newspapers, a growth per capita from 0.161 in 1920 to 0.213 in 1929; a recession to 0.191 in 1933, and then a steady growth to new highs of 0.258 in 1941 and 0.278 in 1943. While not conclusive, these data indicate that newspapers have not been desired less by consumers than previously, if we are to take paid circulation as an index of interest. The hold of newspapers upon their readers has been strikingly demonstrated at times by strikes affecting the newspaper industry. One of the most dramatic instances occurred during the strike of the newspaper delivery force in N e w York City from July 2 to July 16, inclusive, 1945. When newspapers were unavailable from news dealers, thousands of people daily went to the offices of the papers, often standing for several hours in queues that stretched for blocks in order to buy papers over the counter. According to data collected for the Bureau of Advertising, 12 over-the-counter sales mounted from 246,114 on July 2 to 636,817 on July 1 1 and then to 1,256,624 on July 16. Until July 12 most of the papers limited purchases to one or two copies; during the last five days multiple sales were permitted. Fact Finders, Inc., was commissioned by the Bureau of Advertising to interview a cross section of men and women on the streets of N e w York to determine their attitudes regarding the lack of newspapers. T o the first question, " Y o u probably are getting most of your news now from the radio; is radio completely fulfilling your

[12]

Newspapers in a Dynamic World need for news?" 17.3% answered "yes" and 82.7% answered "no." For interviews made on July 12, those responding "no" were 89.2%, as against 76.6% giving the negative answer on July 3 and 5 when the strike was still young. To the second question, "In comparison with the national and war news you usually get, do you think you are missing most or an important part of it or very little of it?" the answers were as follows: Most of It An Important Part of It Very Little of It

24-7%

To a similar question with regard to the local news the answers were as follows: Most of It An Important Part of It Very Litde of It

31.9%

There is some evidence that radio newscasting may stimulate reading, particularly among the more literate. In his study of Radio and the Printed Page, Paul F. Lazarsfeld has given data showing that the radio broadcasting of highly interesting daily events, such as crises in foreign affairs or elections, has not reduced interest in newspaper stories of these events. The consumer evidently wants the elaboration, the interpretation, the pictorial presentation, the comment of others on events which he has learned about over the radio. Lazarsfeld summarized his research as follows : So far as newspaper reading is concerned there are no signs that news broadcasts have reduced newspaper reading. Quite to the contrary, it seems likely that owing to the rising interest in news transmitted by radio, there is now by and large more newspaper reading than ever before. Although no finally conclusive evidence is available, the best hypothesis for scientific tests and practical action is that listening to radio news increases newspaper reading.13 Valuable evidence of consumer readership of newspapers has been accumulating since 1939, when the Bureau of Advertising of the American Newspaper Publishers Association sponsored The Continuing Study of Newspaper Reading, carried out under the direction of the Advertising Research Foundation.

[13]

National Advertising in Newspapers Aside from the importance of The Continuing Study as a research tool to increase the effectiveness of newspaper advertising, it has high potential value to publishers and editors who seek to strengthen the hold of their papers upon readers. The data on reader traffic stops by type of content in these studies are highly significant in providing evidence of: (1) The over-all reading of newspapers. (2) The discriminating interest of divers readers in various types of newspaper content. (3) The effects of various techniques of presentation on readership of news and editorial matter and of advertisements. (4) The effect of format and position on readership both of news and editorial material and of advertisements. In short, publishers and editors have in these cumulative reports a mine of evidence bearing on the readership of newspapers that deserves intensive study. If and when The Continuing Study can be enlarged to include repeated surveys of individual papers, its value promises to be even greater, for such an approach will permit analysis of any journalistic experimentation undertaken by the papers observed. The Value of Readership Studies in Building the Product IN spite of widespread statements of approval of The Continuing Study by newspaper publishers and executives visited, it is our conclusion from observation in our field work that the true value and significance of this research have not been adequately recognized by many newspapermen. In fact we found actual hostility to the project among a few publishers and newspaper executives, and small use of it in many quarters, not only as a valuable source of evidence for critical study of newspaper editorial problems, but also as a helpful promotional tool for the sale of newspaper space. It is not within the scope of this study critically to appraise current newspapers for journalistic excellence and to recommend changes in news and editorial treatment or in format and position. Such problems are gladly left to the journalistic fraternity. W e desire merely to point out that in a dynamic world it is sound business sense for publishers to be alert to the need of adjusting their product to the changing desires of consumers and of providing a [14]

Newspapers

in a Dynamic

World

format that makes for effective advertising, so long as this format does not interfere with the usefulness and appeal of the paper to readers. In studying their product, it is our belief that many publishers might well make greater use of the existing evidence of The Continuing Study and more extensive application of the techniques of consumer research to their own papers. Periodic study by individual publishers, particularly of large-circulation papers, seems necessary, for each paper must fit itself to the desires of its community and of its audience. For example, methods and editorial techniques appealing to a highly literate audience undoubtedly are different from those suited to a paper seeking mass circulation. The small city paper, moreover, with its greater opportunity of utilizing the interests of citizens in personal news, will arrive at a different editorial formula from that of the large city paper where the individual personal news item is inapplicable. Periodic reader research by the individual paper can also provide evidence of readers' attitudes toward a newspaper as an entity, of their loyalty to it or the lack thereof, of their views as to its stand or lack of stand or its bias on political, social, and economic matters. Even though a publisher may decide on many occasions that he should go counter to the sentiments of readers, none the less he should know their sentiments and their opinion of his publication. In the course of our field work we found a few papers conducting excellent periodic reader research to appraise their journalistic efforts. Several publishers of large circulation papers visited were experimenting with fixed consumer panels to get evidence regarding the success or failure of a continuing journalistic experimentation. It is our impression, however, that newspaper publishers as a whole are not using the techniques of consumer research as a guide to consumer desires so extensively as are radio broadcasters, magazine publishers, and industrial companies. It is our conviction that consumer research, widely and wisely conducted, would help newspapers to find the news and editorial adaptations necessary to hold readers and thus to provide a sound advertising medium. In short, in such self-study lies part of the answer to maintenance of advertising leadership. Such self-study also is likely to produce evidence which the newspaper industry needs to convince advertisers of its high readership [IS]

National Advertising in Newspapers and its strong hold on readers. Two sources of such evidence are The Continuing Study and individual readership studies of newspapers. While thus stressing the desirability of carrying to advertisers an impression of the hold which newspapers have upon readers, we hasten to point out a fact to be developed at some length in a later chapter, namely, that although advertisers desire evidence of circulation and readership, their quest for objective evidence has carried them beyond this point to a desire for data regarding the sales effectiveness of any program of advertising and selling and the part of particular media in the results. Accordingly, it behooves publishers to make their medium as effective as possible in producing advertising results, by putting out papers that command readers' time and trust and by arranging advertisements and editorial material to give advertisements maximum readership. The importance of format and advertising position in the problem of newspaper advertising is evident to every newspaperman. One of the most common complaints the advertising department receives from national advertisers is that the position given advertisements in the paper results in small visibility and readership. The significance of this placement in newspaper usage is illustrated in quotations from executives of two large national advertising companies. These statements are similar to those made by a number of advertisers. Said one: "Newspapers have given too little thought to the make-up of the daily or Sunday newspaper as a vehicle for national advertising. This fact explains in part why we have gone so heavily into the supplements rather than into black and white. We have done so to get away from the obstacles met in r.o.p.* use of newspapers. In the supplements we are assured of the same position in all the cities into which we go. We are assured of the quality of reproduction. We are in a position to talk with the supplements' managements with regard to position." Said the executive of the other large advertiser: "One reason why we have tended to go to supplements and to radio network is the uncertainty we have as to where our newspaper ads will appear through the practice of newspapers selling r.o.p. Unless one is using large space, the placement of an advertisement can do much to • Run of paper position; any location convenient to publisher.

[ι 6]

Newspapers in a Dynamic World nullify the chance of getting high readership. In the past we have been large users of newspapers and have kept charts of the position given us by newspapers. On this basis we generally assume that we will get good position in no more than 50% of the papers at any one time. "In contrast, when we use radio we are in control of what we offer the listener; we do not have to worry about where somebody else puts us. We are affected, of course, by what precedes and what follows us, but this is similar to reader traffic in a periodical. So far as our half hour is concerned, we can build as we see fit and exercise our own weight to get listener attention. In other words, on the radio we have better control over building our audience than when we use newspapers." Probably there is no means whereby newspapers can fully satisfy national advertisers in the placement of their advertisements. There are too many advertisers with pet ideas on position, many of which are probably erroneous. Yet there are undoubtedly some things that can be done to modify attitudes such as those just cited which operate against the newspaper as a medium for national advertisers. One thing some papers can do is to give further study to newspaper format and make-up to determine the arrangement of news and editorial material which maximizes reader traffic. The Continuing Study has shown that the percentage of reader traffic stopping on pages varies over a wide range, and that there are wide differences in the interest of the sexes in various types of material.14 After the problem of arranging the material in the paper to build reader traffic, there remains the need of training a make-up man to place advertisements as effectively and as equitably as possible. Every make-up man should be a close student of The Continuing Study and of his paper's own readership studies. Efforts also can be made to break down mistaken ideas and prejudices of advertisers regarding position. An excellent start in this direction has already been made by the Bureau of Advertising of the American Newspaper Publishers Association through its use of analyses of readership data of The Continuing Study. These analyses have shown, for example, that there is no advantage inherent in position on left-hand or right-hand pages, a view counter to the opinion of some advertisers. The study has shown further that for all general news pages containing advertising there is relatively a

[17]

National Advertising in Newspapers greater uniformity of reader traffic stops throughout the paper than many advertisers realize. The study indicates, again, that on such pages of good reader traffic a more important determinant of an advertisement's readership than position is content of the advertisement. It would seem that newspaper publishers, in order constantly to adjust their publications to the changing requirements should follow these three procedures with respect to format: (i) strive to get a format which maximizes reader traffic; (2) try to place advertisements effectively and equitably with reference to interests of readers in news or editorial material; (3) educate advertisers with regard to the facts about position. Our research further indicates that if this education is to be fully effective, it cannot be left exclusively to the relatively small staff of the Bureau of Advertising; the managements of individual papers will have to be thoroughly acquainted with the findings and relay them to advertisers. Further evidence on the need for research in uncovering facts, its use in establishing the effectiveness of various advertising media, and the reliance placed upon it by advertisers is included throughout the book. Arrangement of the Boo\ IT has already been stated that the important questions facing newspaper publishers fall in four classes; namely, those regarding (1) the product, (2) its market, (3) the way it is marketed, and (4) its pricing. With the few comments which have just been given on the product, let us turn to the subject matter considered in our research. Part I of this book, Chapters II to IX, inclusive, deals with the markets for national newspaper advertising, while Part II, Chapters X to XIX, inclusive, considers its marketing and pricing.

[18]

PART I A STUDY OF THE MARKET FOR NATIONAL NEWSPAPER ADVERTISING

CHAPTER II Charting Our Course in a Study of the Market the most apparent fact about the market for national newspaper advertising is that there has been a sharp decline in total volume since 1929. The nature and extent of this decline are examined in Chapter III. Even more important than the fact that there was a decline is a determination of the reasons why it came about. In Chapters I V through V I I I we seek to determine what, in the thinking of national advertisers and their advertising agencies, is responsible for the decline in the position of newspapers as revealed by the statistics of Chapter III. The questions to be answered are these: PROBABLY

( 1 ) What attitudes of mind have guided advertisers and agencies in their selection of media and caused them to regard newspapers less favorably than in years past? (2) What are the current uses of newspapers among various classes of advertisers? (3) What objective evidence is there of the effectiveness of various media? (4) By what appeals and for what uses might national advertisers be induced to increase their use of newspaper advertising in the important period ahead? Research Method Followed THE method adopted to find evidence bearing on these questions was that of interviewing executives of companies advertising nationally and their agencies. During the course of the investigation calls were made on 234 executives of 185 companies; 149 of the executives were in 128 companies doing advertising and widely varying in size and in the type of products sold, and consequently in the character of their advertising programs; 85 of the executives were in 57 advertising agencies ranging from the largest down to agencies with billings of less than $1,000,000. In the interviews we did not seek answers to formal questionnaires, but rather frank, informal statements regarding the practices

[21]

National Advertising in Newspapers and thinking of marketing and agency executives relative to the use of advertising media in general and of newspapers in particular. The questions directed to advertisers were designed to secure evidence on the background and general policies and practices of the business which might have an important bearing on the advertising strategy followed. The .information normally covered: the size of the business; the character of the product; the markets sought; the channels used; the density of distribution; trends in media usage; the promotional strategy adopted in recent prewar campaigns; the media employed in these campaigns and the reasoning back of the selection; evidence as to the effectiveness of the campaigns as a whole and as to the contribution of the various media employed; the character of the schedules used; evidence of the influence of the agency on media selection; evidence as to the effectiveness of newspaper research and promotion directed at the advertiser; evidence as to particular attitudes that might operate for or against newspapers; and evidence as to the advertiser's use of cooperative advertising with dealers. In the calls on advertising agencies information was sought on agency organization as related to media selection; on the use of major media for different types of accounts; on specific practices relative to newspaper usage, such as the setting of milline ceilings and the thinking regarding size and frequency of insertions; and on the appraisals of executives regarding the research, promotion, selling, and merchandising conducted by media organizations. T h e interviews varied in their completeness, ranging in length from approximately an hour to as much as six hours. Reports of these interviews varied from 3 typewritten pages to over 30 pages. Every interview did not cover the full gamut of questions, but in the course of interviews a substantial amount of the evidence regarding the practices and attitudes among the various types of advertisers was obtained on all the questions, and all topics indicated in the questions were thoroughly covered.

Definitive Ratings of Media Impossible F R O M the beginning it was realized that it would be impossible for the authors to find definitive and clear-cut answers by which to rate the relative desirability of media for different types of products and purposes. Advertising strategy, which guides media use, cannot

[22]

Charting

Our Course in a Study of the

Market

be reduced to simple rules suitable for constant application. The programs employed are subject to constant change in the light of constantly changing market forces. Advertising media are simply vehicles for carrying messages to people, and their effectiveness at any time depends upon the skill with which they are used in combination with all the other elements which make up programs of selling and promotion. Every medium properly used can be an effective element in a sales program; poorly used, it can represent wasteful expenditure. Generally there are so many variables, including the media employed, which have a bearing upon the success or failure of any promotional program, and the measurement of their contribution is so crude, that even the most intelligent and well-trained managements find it difficult, if not impossible, to build clear and irrefutable evidence of the exact contribution of any medium to sales or profit.1 Clearly it was not possible for the authors, with the research techniques and the resources available, to obtain irrefutable evidence by which to rate the value of different media to various types of advertisers. Progressive managements, of course, are constantly seeking objective evidence as to the effectiveness of their marketing operations as a whole and of the various parts. Numerous advertisers and agencies were found to be carrying on programs of experimentation and research aimed at increasing the effectiveness of their use of the various media. At no time, however, can an advertiser say that his efforts to improve promotional strategy or to increase a medium's effectiveness are finished and that he has the final answer as to what is the best way to advertise or promote a product. An executive of one of the largest grocery product advertisers, who in recent years has used radio extensively, thus summarized the point : "Magazines and newspapers can always come to us and say rightfully, 'Radio may have been more effective than newspapers or magazines the way you have used them, but magazines and newspapers might be equally effective if you had used them differently, if your copy had been better, or if you had used different dealer tie-in methods or had used schedules with larger space and greater frequency to give an impact comparable to your radio usage.' "We cannot answer this argument objectively, for our experimen[23]

National Advertising in Newspapers tation has not gone far enough to secure data that will answer this charge. All alternatives have not been tried. "On the other hand, our management has to make up its mind on the basis of the skills at its command, its knowledge of how to use various media, and on the basis of the experiments which it has conducted. When our current operating formulae tend to lose effectiveness, and further experiment shows a more productive usage, then we shall alter our procedure." It is easily understandable why—in the light of different variables under which they operate, the wide range of efficiency with which any medium can be used, the differences in the experience and skills of managments, and the difficulties of measuring media effectiveness—different advertisers were found to employ widely varying practices and to arrive at different answers with regard to the type of advertising strategy which they deem best for them. There are generally a number of profitable promotional approaches open to an advertiser. In fact, advertisers with the same type of products and quite similar selling problems were found to be using quite different promotional strategies with profitable results. For instance, a certain large grocery product advertiser called upon has made newspapers his primary medium for building the reputation of his product. He has made little or no use of radio. His operation has been profitable, his sales have increased over the years. Newspaper advertising cannot be considered the sole cause of his success, however; it has been one element in a complex merchandising and promotional program. T h e inherent value of his product, the skill with which his newspaper advertising has been conducted, his product merchandised, the personal selling program carried on, and the moves of competitors countered, all have contributed to his success. In contrast, another advertiser selling similar products nationally has practically given up the use of newspapers and has relied almost solely on network radio for consumer advertising. A highly successful radio program reaching a wide audience has, in conjunction with the other merchandising and selling efforts of the company, produced a successful and profitable sales result. In the course of our investigation we found that successful use of one medium by a competitor not infrequently was an important consideration leading an advertiser to turn to another medium as the [ 2 4 ]

Charting Our Course in a Study of the Mar\et primary vehicle for enhancing his reputation. In such cases the advertiser decided to individualize himself in the eyes of the trade and of consumers by seeking a dominating place in a medium not dominated by competitors. The value of a medium to any one advertiser is not immutable, for conditions affecting his marketing change constantly. In our survey we found advertisers testifying to radical changes in media employed from time to time in order to meet changes in market conditions. For example, a medical product sold to mothers had a profitable sales volume built through newspapers. The management concluded, however, that changing competition made advisable increased effort to develop a quality reputation for its product. Since the product was largely for use by children, a strong conviction of the product's merit on the part of mothers, rather than strong appeal for immediate use, was deemed desirable. T o carry out the objective required a radical change in the company's copy approach. The new copy and the management's desire for a feeling tone of high quality in the advertisements led it to adopt magazines as offering the best opportunity in the long run to build the brand reputation desired. In another case a food advertiser which delivered its product to retailers by truck found it advisable, as a result of war conditions, to cut down the mileage of delivery routes. Consequently, distribution was limited primarily to city areas. In view of the new distributive setup the management dropped a network radio program and turned to newspapers because they offered concentration of circulation where desired. Again, we found advertisers and agencies not infrequently operating on the theory that it is desirable to rotate media in order to arouse new interest in a product when there is evidence of waning interest in a campaign in the medium currently used. In contrast, other advertisers strongly adhered to the theory that an audience should be pursued and consistently developed when once selected. It is hardly necessary to state that it is impossible scientifically to judge the relative soundness of these various theories. The evidence is too tenuous. From the standpoint of rationality in media selection, it is our belief that a sounder approach has been followed by certain adver[25]

National

Advertising

in

Newspapers

tisers who have experimented to determine effective marketing formulae for each of their specific products. T h e y have applied such controls as have been available to j u d g e the audience reached and the response of this audience to the advertising in either reading, listening, or sales response. Changes have been m a d e in media generally when an advertising program has shown declining effectiveness and when further experimentation has suggested a promising new advertising strategy. Advertisers are great imitators. W h e n one finds an effective new advertising formula, others copy. A good example is found in the daytime radio serial stories that had such a growth in the past decade. Serial after serial was added to the air until the effectiveness of the program of any one advertiser has declined. Average ratings have tended to drop. U n d e r such conditions, our interviews show, the advertiser and his agency look for new types of programs to which to shift. T h e knowledge on which to base shifts is always incomplete. Every expenditure involves risk, but the search for objective data to guide change has represented an attempt to reduce risk. The Importance

of Advertisers'

Attitudes

IN view of all the difficulties of finding simple definitive answers as to media effectiveness in a dynamic world, the best approach to the problem has seemed to be that of reporting the media practices of different advertisers and their attitudes which might explain trends pf media usage. T h i s approach has been adopted not merely because it is impossible objectively to say which m e d i u m is best for any advertiser, but because the attitudes of advertisers and their advertising agencies are in themselves the major force in determining media selection. T h e attitudes f o u n d may have been arrived at after considerable media research; they may have been based on hypotheses having little or no scientific support; they may even be erroneous and entirely unwarranted. Nevertheless, newspaper executives should fully appreciate these attitudes and what lies behind them if they are to approach intelligently their problem of changing them and thereby increase newspaper usage. T h e task of presenting a summary or interpretation of our interviews has been most difficult. T h e y cannot be tabulated. T h e y represent many shades of thought. T h e permutations and combinations

[26]

Charting Our Course in a Study of the Market of viewpoints on various issues are many. Nevertheless, as a result of grouping the advertisers according to type of marketing pattern and size of appropriation, certain tendencies and uniformities have become apparent. In the pages ahead we shall attempt to give a balanced interpretation of these viewpoints. The Place of the Advertising Newspaper Advertising

Agency in the Market for

National

IN the following chapters on use of newspapers by advertisers we will be speaking primarily of the advertisers' uses of and attitudes toward media. It is sound to speak of the advertisers' attitudes as determining media selection, for final decisions on advertising strategy rests with the advertiser. It is necessary, however, immediately to give recognition to the important part played by advertising agencies in media selection. They are the special counsels who recommend advertising plans, counsels who advertisers generally admitted to us have great influence, even though most advertisers claimed to weigh agency recommendations carefully and to arrive at their own decisions. Moreover, after an advertising plan, which determines the type of media to be used, has been adopted, the agencies ordinarily, we found, are given large responsibility over the selection of individual publications or radio stations to be used. In our interviews among newspaper executives and the special selling representatives of newspapers, there was evident a feeling on the part of some that newspapers suffered at the hands of agencies for a number of reasons. First, they felt that some agency men were not inclined to use newspapers because the medium was more bothersome and more costly to service than magazines and radio, hence was less profitable to them. Others felt that certain leading agencies had become unduly wedded to radio and that newspapers were not given due consideration. Then the view was expressed that some agents had been alienated because newspaper billings had been lost to agencies through failure of certain newspapers to maintain a steadfast policy as to what advertising should be placed at the national rate and what at the local rate. In our interviews with advertisers and agencies we attempted to determine whether there were special attitudes on the part of advertising agency counsel that militated against newspapers. For the [27]

National Advertising

in

Newspapers

most part we found little difference between the attitudes of advertisers and their agencies toward media. Both were quite uniformly seeking to select the best media through which to attain successful sales of the product; and both were seeking objective evidence in order to make the media selection as objective as possible. In the pages ahead, therefore, except where special comments are given, the discussion of advertisers' attitudes and practices implies that their agents acted in similar fashion. Order of Presentation in the Chapters

Ahead

ANALYSIS of the case material and the data from interviews has shown that many factors have a bearing on the determination of marketing and advertising strategy employed by national advertisers, and hence on the media used. Among the more important are : the types of retail distribution employed, whether selected or nonselected; the extent of geographical distribution, whether local, regional, national, or spotty; the degree of selectivity of market among consumers, whether one permitting a real mass media approach or one calling for media reaching selected groups of people; the type of copy that is deemed effective, whether visual or auditory, and if visual, whether good reproduction and color are significant; and the size of appropriation available, whether allowing the use of numerous media or making a wise concentration of expenditure.

In organizing our material we have chosen to group advertisers on the basis of the kind of retail distribution they employ. The factors listed above and others are discussed as they are met in the media practices and viewpoints of these various groups of advertisers. The media practices and attitudes of advertisers distributing their products on a nonselected basis through all types of retailers handling their kinds of products are discussed in Chapters IV, V, and V I ; those of advertisers who distribute through selected retailers are given in Chapter V I I ; and those of certain advertisers who for one reason or another do not fit under either of the above divisions are reserved for Chapter VIII. As a setting for these discussions of the use of newspapers by the various classes of advertisers, there are presented in Chapter III, some statistics showing the changing usage of newspapers for national advertising.

[28]

CHAPTER ΙΠ Some Statistics on the Changes in National Newspaper Advertising O U R OBJECTIVE in this chapter is to present a clear picture statistically of just what has happened to the expenditures of national advertisers and to newspapers' share in this advertising pool. The volume of national advertising secured by any medium in any year depends upon: (i) the size of the total advertising expenditure by national advertisers; and (2) their distribution of this expenditure among media. Both of these are, in reality, determined by the cumulative effect of a large number of decisions made independently by executives of business organizations: decisions as to whether to do national advertising and if so, how much to spend and in what media to spend it. Because of an interweaving of economic cause and effect the total amount spent for national advertising in any one year in the whole country tends to vary with national income.

Total Advertising Expenditure as Related to National Income FOR this reason, before focusing attention specifically on figures of national advertising, let us look at the picture of changing national income during the past two decades and the place of advertising as a part of income activity. The changes in national income and corresponding changes in the volume of advertising are shown in Exhibit 2, page 30. This chart shows clearly one reason why newspapers suffered a severe drop in income during the thirties. National income had risen during the twenties to a peak of nearly $88 billion in 1929. Advertising expenditures had been large during that decade, reaching a peak in 1929 of $2.6 billion. During the disastrous thirties, national income fell at the depth of the depression to less than half the 1929 income and was well under the 1929 figure until war preparation in 1941 brought a new high in economic activity. During this period advertising suffered, although as judged by Printers' ln\ Index of Advertising Activity which provides the basis of estimates of advertising volume,

[29]

National Advertising in Newspapers EXHIBIT I

Total Advertising Volume and National Income Estimates, ¡¡liions 15 0 140 I JO

of

1920-1941

Dollars

120

no

zoo 90 60 70 60

\

¡/-Nati mo!

Income

30

L—^

40

-

^

X

1920

ting

1925

\ Volume

1950

1935

1940

Advertising Volume—Printers' InJuly 14, 1944, p. 25. National Income—Kuznets, S. S., National Income and Its Composition, igiç-iç^8 (New York, National Bureau of Economic Research, 1941), Vol. I, Table 44, p. 310, for years 1920-1938; U. S. Bureau of Foreign and Domestic Commerce, Survey 0} Current Business, April, 1944, p. 15, for years 1939-1943. SOURCES:

[SO]

Changes in National Newspaper Advertising the decline was not quite so severe as that of economic activity as a whole. During the latter part of the thirties, however, advertising appears to have lost ground relative to economic activity as a whole. Advertising volume, expressed as a percentage of total national income, declined appreciably after 1935. Whereas throughout the twenties and the early thirties advertising accounted for 3% or more of national income, this percentage tended downward after 1937, until in 1940 it was only about i \ % . In 1941, with the sharp upward turn of national income from war preparations, it was less than 2% of national income. During the war it fell to less than i i % . The lag of advertising activity is borne out, also, by a comparison of an index of general business activity, such as the Federal Reserve Board Index of Industrial Production with Printers' ln\ Index of Advertising Activity, as shown in Exhibit 3. The reasons are apparent why advertising during the war accounted for a relatively smaller percentage of national income than in previous years. In spite of wartime restrictions, advertising expenditures since Pearl Harbor increased above the 1929 level, but they were small in comparison with the tremendous national income resulting from war production. Just why there should have been a relative decrease in the years just preceding the war is not entirely clear, nor is it the purpose of this study to inquire closely into this matter. Yet such a decline in the use of advertising by business is of significance to newspaper publishers and to operators of all advertising media. It affects their chief source of income. Suffice it to say that the decline in the rate of advertising expenditure, which had its effect upon newspaper revenue in the thirties, was probably the result of numerous forces. Undoubtedly because of the cataclysmic happenings of the thirties, business was less venturesome. Relatively lower advertising volume was an aspect of the repressed economy, for advertising does not flourish in an economic climate that is not venturesome and growing. Again, the growing practice of carefully budgeting advertising expenditures and of seeking greater effectiveness from each advertising dollar undoubtedly cut into the free-and-easy, and somewhat wasteful spending of earlier days. Moreover, in a period of depressed business, competition is prone to shift from nonprice forms to price competition resulting in

[31]

National Advertising in Newspapers narrowed margins. Advertising, accordingly, is reduced. This fact is illustrated in the case of radio sets, which is dealt with later in this chapter. This brief look at the business activity of our economy during the EXHIBIT 3

Advertising Activity and Industrial Production, ig20-ig44 (1935-1939 = 1 0 0 ) Per Cent of I9J5 -59 Average 250

Γ

/

¿00

ISO

/

\ /-^Adve •fijing Index 100

50

IS20

•¡a/ Product! Index 1925 1330

¡955

1940

S O U R C E : Printer/ ln\ Index of General Advertising Activity and Federal Reserve Board Index of Industrial Production.

[32]

Changes in National Newspaper Advertising past 15 years and the place of advertising in that activity explains in part the losses in newspaper advertising revenue, both national and local. T h e declines stemmed from the shrinkage in the advertising expenditure pool that accompanied business depression. And in later years advertising activities declined even more than did total economic activity.

The Distribution of Advertising Expenditures Among Media THE distribution of the total advertising expenditure pool among various media depends upon the favor in which these media are held by national advertisers. This favor depends on advertisers' ideas as to the relative effectiveness of the media for various uses. These beliefs turn upon advertisers' experience, upon the skill with which media owners adapt their media to advertisers' needs, upon the prices which they set for space or time, and upon the aggressiveness and keenness with which each sells and promotes his medium. The changing position of advertising media is shown in Exhibit 4. Apparent at once is the tremendous upsurge of radio during the past 15 years. This new and strikingly successful medium accounted in large part for the relative loss in position of newspapers and of magazines during the thirties. Out of an annual advertising pie which until war years was smaller than that of 1929, radio has progressively taken a larger piece each year, newspapers a smaller piece. The facts just cited include local as well as national advertising. Let us narrow our attention now to the expenditures of national advertisers, the group of particular interest in this study. In the pages ahead we shall see that newspapers have lost position to a far greater extent in certain classifications of advertisers than in others. Network radio will be seen to have made its inroads chiefly among large advertisers selling such products as grocery items, drugs, and cigarettes. Magazines have gained considerably at the expense of newspapers in such classifications as household equipment and alcoholic beverages. In other classifications newspapers have held their relative position fairly well. Such determination of the areas in which newspapers have fared better or worse gives helpful guidance for later analysis.

[33]

National Advertising in Newspapers

EXHIBIT 4

Advertising Activity in Five Major Media, 1920-1944 {1935-1939 = -roo) Per Ceni of 1935 -39 A ν e ra g e 30 0

/

Outdoor-f \ \ h Paper \· ' varm \\ r Λ\ Newspaper ! Y\jfGenera

>

/

/ f A

Λ Ι

¡Λ'

Magazm e

/^V

/

/ ψ -

¡ífítJ—''

/

t

"

dio 1920

/SPS

1930

1935

1940

SOURCE: Printers' ln\, February 2,1945, pp. 21-23. T h e Index of General Advertising Activity, also shown, is based on data for newspapers, magazines, radio, farm papers, and outdoor advertising, but does not reflect figures for direct mail, trade papers, and other miscellaneous forms of advertising.

[34]

Changes in National Newspaper Advertising The Advertising Pool of Five Major Media for All National Advertisers E X H I B I T 5 shows graphically the shifts in use of five major media for national advertisers as a whole. The following points may be noted: By 1941 the expenditure pool had practically recovered from a low of some $295 million in 1933 to its 1929 level of almost $530 million. By 1943 the pool had reached a new high, more than 20% above 1929. Newspapers by 1941, however, had lost their pre-eminent position of 1929. After a severe descent in the early thirties, newspapers failed to make a material recovery toward their former high; by 1943 the newspaper pool was still only two-thirds as big as in 1929. General magazines, after slipping relatively more than newspapers in the early thirties, staged a better comeback and passed newspapers in 1941. In that year, magazines claimed $174 million, or about a third of the expenditure pool; newspapers about $169 million. Radio networks had a constant and relatively sharp rise throughout the period, with only a slight set-back in the year 1933. After 1940, networks claimed about a fourth of the expenditure pool. National spot radio likewise experienced a steady growth, so that by 1940 with a share exceeding $50 million it had become a major medium for national advertisers. In 1941, national network and national spot together received an amount equal to that of general magazines, and thus greater than that of newspapers. In short, among national advertisers, newspapers slipped from a strong first position in 1929 to third place in 1941, if radio is looked upon as a single medium. It has already been seen that the decline in the amount spent for national newspaper advertising was the result of two forces: ( 1 ) a decline in the total amount spent on all kinds of national advertising, (2) a shift of expenditures from newspapers to other media. A n accounting to reveal the effect of these two forces on national newspaper advertising for the two years 1929 and 1941 would read somewhat as follows:

[35]

EXHIBIT 5

Expenditures of National Advertisers in Pool of Five Major Media Estimates, 1929-1943 Millions

700

of

Dollars

600

500

\ \{Poû/(Tota!)

400

300

\ ¿Newspapers

¿00

\ Maya

\ \ \

/

\

too

s

V/

'23 1330 '3/ '32

•

• --O'

Raa

°

t

// —J /

\

\

/

* .0

//at'/ Non-networks „-o*" 0**~ Radios 33

34 1335 36

37

3d

33 1340 '4/ '42 '43

SOURCE: Based on annual figures reported by National Advertising Records (Publishers' Information B u r e a u ) , Media Records (Media Records, Inc.), a n d Expenditures of National Advertisers ( A m e r i c a n Newspaper Publishers Association). Estimates for production and talent costs were included w i t h space a n d time costs as explained on pp. 37 and 41.

[36]

Changes in National Newspaper

Advertising

1. T h e total advertising pool of all national advertisers in the five media in 1929 was $528,900,000 2. T h e same pool in 1941 was 527,700,000 3. T h e decrease in the size of the pool was 1,200,000 4. Newspapers' share in 1929 was about 54%, or 288,600,000 5. Newspapers' share in 1941 was about 32%, or 168,500,000 6. T h e actual loss for newspapers, 1941 vs. 1929, was 120,100,000 7. If newspapers in 1941 had obtained as large a percentage as in 1929, they would have received 287,900,000 8. Therefore, the loss of newspapers attributable to the competition of the four other media was 119,400,000 (Item 7 minus Item 5) 9. T h e loss of newspapers attributable to the decrease in the size of the expenditure pool was 700,000 (Item 6 minus Item 8) Exhibit 6, which gives similar accountings for various product groups, presents further evidence of the effect of declines and shifts in advertising and measures the effect of each force upon total national newspaper advertising devoted to those products. It should be emphasized that the figures in the table are estimates. Nevertheless they are sufficiently accurate to reveal what has taken place in the competition among media.* Data for additional years by product •It was not feasible to follow the changes in advertising since 1929 for all types of media among the different classifications of advertisers because satisfactory data by classifications were available only for newspapers, general magazines, network radio, and sectional farm journals. T o these four media, nonnetwork radio or "national spot" advertising could be added for national advertisers as a whole, but not for classes of advertisers. Similarly, the commodity groups analyzed do not represent all products or services advertised on a nationwide basis, but only those which contributed advertising revenue of some magnitude and for which satisfactory data were available over a period of years. The figures for Exhibits 5, 6, and Β were based principally on the measurements made by the two advertising measuring services, Publishers' Information Bureau and Media Records, Inc., and largely available in reports of the American Newspaper Publishers Association. Newspaper supplement figures were included with newspapers rather than with magazines. In the case of newspapers it was necessary to estimate expenditures prior to 1938 by applying Media Records' index of linage in 100 major cities to the measured dollar figures of newspapers of a large number of cities made by Media Records in 1938 and following years. Some difficulties were experienced in fitting together the product classifications of the two measuring bureaus, and these variations in classification have caused some error in the media estimates. But the error is not deemed large enough to invalidate the conclusions drawn from the data. The estimates included an allowance for talent costs in radio and for production costs of the printed media. A t the same time, the so-called gross figures for space and time [Continued on p. 4 1 ]

[37]

EXHIBIT 6.

Estimates

of Change

in Newspapers'

Selected

Commodity

Share Groups,

(In thousands of dollars)

Items

All Commodities

Total national advertising pool, 1929 . T h e same pool in 1941 Change in size of pool, 1929 to 1941 .. Newspapers' share of 1929 pool Amount Percentage of total 5. Newspapers' share of 1941 pool

ι. 2. 3. 4.

ι.

Grocery Products

2.

Automotive Products

$528,900

$94,910

527,700

119,600

— 7,200

+ 24,690

288,600

50,760

68,750

54-5%

54%

65%

168,500

40,190

3i-9%

34%

31.550 47%

¡0,570

— 37,200

—120,100 .

Newspapers' hypothetical share of 1941 pool on 1929 basis Percentage of total Amount

-

22.6%

-

$105,270 67,590 -37,680

-20%

54-5%

54%

65%

287,900

64,580

43)93°

Breakdown of decline in newspapers' share, 1929 to 1941: a. Part attributable to competition of other media (line 7 minus line 5) Amount — IIQ^OO Percentage —çg.4% b. Part attributable to decrease in size of total pool (line 6a minus line 8a) Amount — 700 Percentage -0.6%

— /2,38ο

~ 33%

N o n e

— 24,820 -67%

* Data for 1929 were not available for t w o product groups, alcoholic beverages and confectionery products; hence, other base years had to be substituted in these t w o cases. T h e year 1934 was used for alcoholic beverages and 1935 for confectionery products.

SOURCE: T h e data presented in Exhibit 6 were based on annual figures reported by National Advertising Records (Publishers' Information Bureau), Media Records, and Expenditures of National Advertisers (American Newspaper Publishers Association). NOTE: "Expenditures" were considered to include space and time costs plus estimates for talent and production costs, as explained on pp. 37 and 44. The

[38]

of National 1929*

and

Advertising 1941

Pool

of Four

Major

Media

for

Compared ( I n thousands o f dollars)

3. Drugs and Toiletries $88,210 84,960 -3,250

4. Tobacco 5. Alcoholic 6. Household Products Beverages* Equipment $31,790

$16,233 29,503

7. Radio Sets $30,063

8. Industrial Products

1.843 — 28,220

$29,310 18,110 — 11,200

+ I3.270

$34.37° 21,700 —12,670

24,780 78%

12,326

12,730

76%

37%

19,740 66%

5.930 20%

14,060 33%

19.545 66%

3.980 18%

411 22%

1,740 10%

- 30,030

—10,720

+ 7,219

-

'9,329

- 4,190

-33%

-45%

-10%

-19%

52,420 59% 22,390 26%

59% 50,130

-27,740 -92%

— 2,2 go

42.350 + 10,560

78% 33.030

AAl 11l

None

76% 22,422

AAl 11l

None

«.750

37% 8,030

-

~44%

-10%

66% 1,216

20% 3,620

- 4,050 -46%

-S05

- i,88o

-4%

-45%

— 4,700

—18,524

-54%

~Φ%

— 2,3/0 ~55%

commodity groups shown do not represent all products or services advertised on a nation-wide basis; hence, the figures in the second through the twelfth columns do not represent a complete breakdown of the totals for "All Commodities" shown in the first column. The advertising pools for the separate categories contain expenditures only for newspapers, general magazines, network radio, and national and sectional farm journals. Figures for national nonnetwork radio were included only in the total column. The arrangement of the commodity classifications is roughly in accordance with the size of the individual expenditure pools in descending order.

[39]

National E X H I B I T 6 {Continued).

of National

Advertising

in

Newspapers

Estimates of Change in Newspapers'

Advertising

Selected Commodity

Pool of Four Major Media

Groups, 7 9 2 9 * and 1941

Share

for

Compared

(In thousands of dollars) 9. Hotels, Resorts, and Transportation

Items

1. 2. 3. 4.

Total national advertising pool, 1929 The same pool in 1941 Change in size of pool, 1929 to 1941 . Newspapers' share o£ 1929 pool Amount Percentage of total 5. Newspapers' share of 1941 pool Amount Percentage of total 6a. Change in amount of newspapers' share, 1929 to 1941 6b. Change in percentage of newspapers' share of total pool 7. Newspapers' hypothetical share of 1941 pool on 1929 basis Percentage of total Amount 8. Breakdown of decline in newspapers' share, 1929 to 1941 : a. Part attributable to competition of other media (line 7 minus line 5) Amount Percentage b. Part attributable to decrease in size of total pool (line 6a minus line 8a) Amount Percentage

11. 10.

Wearing Apparel

$32,780 18,490 —14,250

$12,950 14,230 + 1,280

$6,317 4,902 —1415

24,300 74%

4,330 33%

3,633 58%

11,810 64%

1,460 10%

366 7%

—12,490

—2,870

—3,267

— 10%

— 23%

—51%

74% 13.683

33% 4,696

58% 2,843

-1,873 ~'5%

.„

—10,617 —85%

None °nc

[See pp. 3 8 - 3 9 for footnote, source, and note.]

[40]

Confectionery Products*

-2477 -76%

—

- 2 4%

Changes in National Newspaper Advertising groups and subgroupings are shown graphically in Exhibit 8 at the end of this chapter, pages 57-66. For simplicity's sake the total amounts spent for advertising in the various product groups are referred to as expenditure "pools." A s is explained in the note to Exhibit 6 the pools include only expenditures by various groups of advertisers in those media for which satisfactory expenditure data are available. It should be kept in mind that these pools are just a part, albeit a large part, of the total expenditure of these groups. Fluctuation in the size of a pool from year to year may be attributable not merely to changes in the rate of expenditure by members of a group, but to changes in the pattern of advertising and promotion which may have diverted expenditure to media outside the pool; for instance, to cooperative advertising through dealers, to the outdoor medium, or to car cards.

Analysis of National Advertising by Product Groups E X H I B I T 6 is especially valuable in giving a broad picture of the changes in national newspaper advertising and in revealing at a glance the changes in those product groups between 1929 and 1941. Exhibit 8 gives data for intervening years. The few comments regarding the various product groups which are given below are based on both Exhibit 6 and the more detailed yearly data. G R O C E R Y PRODUCTS. For this product group, different from many others, the total pool was greater in later years than in 1929. Starting with about $95 million in 1929, the pool dropped to about $76 million reported by the advertising measuring services were modified to eliminate the excess or overage which results from multiplying the quantity of space or time used by the onetime rate, with no allowance for quantity discounts, which in the case of network radio are particularly heavy. In short, the data represent an attempt to show the actual ouday of various groups of advertisers in using the various media. Inclusion of radio talent costs is particularly necessary in a correct appraisal of the share of the advertisers' expenditure pool devoted to that medium. Since talent for radio was included, it appeared sound to allow for production costs of other media. T h e allowances for talent and for production costs can be deemed little better than educated guesses, even though much time and effort were spent to get proper estimates. T h e production costs allowed for newspapers and magazines are 1 0 % of estimated space costs. T h e talent and production costs allowed for nonnetwork radio are 2 0 % of estimated time costs, a figure on the conservative side. The allowance for talent on network radio varies over the period studied, ranging from 2 5 % of estimated time costs for 1 9 2 9 to 5 0 % for 1 9 3 9 and later years.

[41]

National Advertising in Newspapers in 1933 and then increased steadily to about $120 million in 1941. Had it been possible to include nonnetwork radio figures, a still greater expansion would have been indicated, for sales data from the limited number of broadcasting stations reporting to Publishers' Information Bureau reveal that in 1941 as much as 30% of nonnetwork radio expenditures were for grocery products. If this percentage held true for all broadcasting stations, grocery products advertisers spent in excess of $16 million in nonnetwork radio. In the pool both newspapers and general magazines lost materially to network radio. In 1929 radio had accounted for less than $3 million in the pool; by 1941 it accounted for practically $48 million. One of the more important subclassifications of grocery products is soaps and cleansers. This classification serves well to show the inroads made by radio in a product group that is dominated by large-scale advertisers. Whereas network radio in 1929 represented only 2 % of an advertising pool for soaps and cleansers of approximately $15 million for the four media, in 1941 it accounted for over 50% of a pool that then approximated $25 million. Magazines lost much more relatively in this period to radio than did newspapers. In 1929 general magazines' share was 58%, as against 1 5 % in 1941. In the same years, newspapers' share changed from 39% to 3 1 % . A U T O M O T I V E PRODUCTS. In this classification newspapers' reduced share has come more from a decline in the size of the pool than from loss to competitive media. In 1929 the automotive group was the largest single category of national advertisers, with an expenditure pool of $105 million in the four media. In 1941, the last peacetime year, this pool was only about $68 million. Throughout the intervening period it was far under the 1929 figure. The greater part of the loss to competing media was to radio, which gained from 3 % of the pool in 1929 to 1 4 % of the pool in 1941. During the period, magazines also strengthened their proportion slightly. Outside of the four media pool, national advertisers of automotive products used an appreciable amount of nonnetwork time as indicated by Publishers' Information Bureau records, over a limited

[42]

Changes in National Newspaper Advertising number of broadcasting stations. Probably $4 million was devoted to this medium in 1941, of which three-fourths was for gasoline and oil advertising. Within the automotive group, varying trends are found for the two important subclassifications, gasoline and oil advertisers, and passenger car advertisers. In the case of gasoline and oil advertisers, the expenditure pool was approximately the same size in 1941 as in 1929, about $18 million. Radio networks' share during this period advanced from about 6% to 36% of the pool. General magazines' share also increased, though not so materially, from 22% to 29%. In the meantime, newspapers' share dropped from 69% in 1929 to 3 2 % ; thus newspapers lost relatively both to magazines and to radio. In the case of passenger cars it was impossible to derive comparable data throughout the period, because the product breakdowns of the reporting services' categories did not permit. Data from 1939 on indicate that passenger car advertisers did not turn largely to radio. Newspapers' loss came primarily from reduced expenditures. The decrease in size of the automotive classification as a whole is attributable largely to this subclassification. In the years just preceding the outbreak of war, newspapers continued to be the dominating medium, with some 60% of the total pool. Magazines had about half of this percentage, and radio chain stations were getting only some 6% to 7 % . With the advent of the war, passenger car advertising was sharply curtailed below the 1941 level and the automobile companies at that time shifted to institutional advertising carried on in large measure through radio network programs. Even though this shift may possibly be looked upon as abnormal, now that the war is over newspapers will have to struggle to regain their former dominant position in the automotive field. D R U G S AND T O I L E T R E Q U I S I T E S . Because of a variation in product classifications by the advertising measuring services, it was necessary to combine the important groups of drugs and of toiletries to get comparability for the period 1929-1942. Separate charts could be constructed for the two classifications, however, for the latter part of the period and are given in Exhibit 8, pages 61-62. The following points may be made concerning the trends of

[43]

National Advertising in Newspapers media usage in the advertising pool for these two important advertising classifications: In 1941, the last year before this country was actively at war, the pool of approximately $85 million had not quite returned to the 1929 level of $88 million. In this period newspapers' share had decreased from 59% of the total pool to 26%. Magazines' share fell from 38% to 3 0 % . In the meantime, network radio's share had increased from 2 % to 43%. Had it been possible to include nonnetwork radio in the expenditure pool, a full recovery to 1929 levels would have been shown, for drugs and toiletries advertisers have made extensive use of this medium. Publishers' Information Bureau figures for a limited number of stations in 1941 indicated that somewhat less than 30% of the nonnetwork revenue of the stations came from advertisers in these two categories. If a similar percentage held for all broadcasting stations, nonnetwork radio accounted for approximately $ 1 5 million of the advertising money spent in this medium by drug and cosmetic advertisers. A study of the trends for toilet requisites for the period 1935-1942 shows somewhat different behavior from those for drugs and remedies. By 1935 radio had become an important medium for toilet requisite manufacturers, taking almost a third of a pool of about $38 million. Between 1935 and 1944 radio networks' share of the toiletries advertising increased only from 32% to 38%. Accordingly, magazines' and newspapers' shares were not materially reduced in this period. In the case of drugs and remedies, however, radio improved its position materially between 1935 and 1941. Whereas in 1935 it accounted for 23% of the pool, by 1941 it accounted for 50%. In the meantime, newspapers lost position from 50% of the pool in 1935 to only 30% in 1941. TOBACCO PRODUCTS. The data show clearly a fact previously commented upon, namely, that tobacco advertisers, of whom many are large companies selling to mass markets, have during the past decade made network radio their primary medium. Newspapers have lost relatively both to network radio and to general magazines. In 1929, newspapers claimed 78% of the four media pool of some $32 million. In 1941, newspapers secured 33% of a $42 million pool.

[44]

Changes in National Newspaper Advertising In the same period network radio advanced from 4 % to 42% of the annual pool; magazines from 1 7 % to 2 3 % . In 1941, tobacco advertisers probably spent about $3 million a year in nonnetwork radio, as estimated from Publishers' Information Bureau's partial survey of this medium. In the subclassification of tobacco products, the shifts toward radio held for both cigarettes and cigars. ALCOHOLIC BEVERAGES. N e w s p a p e r s continue to be the dominant

medium for the advertising of alcoholic beverages. But magazines have made appreciable gains in this field. Radio, because of public policy restrictions, has never been employed by liquor advertisers other than for wine and beer. After the repeal of the prohibition law, the advertising expenditures of alcoholic beverage advertisers were quickly built up. In the first few years, newspapers accounted for 80% or more of a pool which has ranged between $24 million and $31 million. By 1941, magazines practically had doubled their 1935 share of this pool, rising from about 1 6 % to 3 3 % . Newspapers in turn had dropped to 66% of the pool. After the advent of the war with its abnormal conditions, magazines further increased their share of the pool, primarily among liquor advertisers. In 1943, magazines claimed 57% of the total pool of advertising for alcoholic beverages other than beer and wine. In 1941, beer and wine advertisers probably expended in the neighborhood of $2 million in nonnetwork radio. HOUSEHOLD E Q U I P M E N T . Advertising of household equipment, which includes such items as electrical apparatus, automatic heating apparatus, heaters, and stoves, has throughout the period of the study been predominantly a magazine classification. Through 1941, network radio never made appreciable inroads in this classification. Magazines, however, strengthened their hold at the expense of newspapers. Whereas in 1929 newspapers accounted for 37% of a $34 million pool, in 1941 they accounted for but 1 8 % of a $22 million pool. In the meantime, magazines increased their share from 58% to 7 5 % . R A D I O S E T S . Radio set advertising shows a greater loss in the size of the pool between 1929 and 1941 than any other classification. In

[45]

National Advertising in Newspapers 1929, radip set manufacturers were important national advertisers in newspapers, giving the medium 66% of a total pool of $30 million. In 1941 this same pool was less than $2 million, of which newspapers secured only 22%. This reduced national advertising of radio sets is believed to be a phenomenon of price competition that developed with the depression of the thirties. The dollar sales volume of the industry fell away markedly. No longer did advertising and other forms of nonprice competition in the radio set field flourish as they had in the late twenties. Instead there was a keen price competition among manufacturers of portable sets. All the major media lost a lucrative source of revenue. In 1941 newspapers secured only about 2% as much national revenue from radio manufacturers as in 1929. Magazines fared better, because advertisers generally turned to magazines as their primary medium when reduced appropriations did not permit national coverage through both magazines and radio. The possibility that the advertising appropriations of radio set manufacturers had been diverted in large measure to cooperative advertising was investigated. The evidence does not support such an hypothesis. Media Records' index of newspaper linage in 100 major cities shows that retail radio set advertising decreased rapidly after 1929, though not so materially as did national advertising linage. The following index figures of retail radio set linage for selected years with 1929 = 100 give the picture. Index of Retail Radio Set Linage in Newspapers

Year

1929 193χ 193 2 I935 1937

IOO 32 J 3 22 2 3

1938

l6

These data indicate that any funds diverted by manufacturers to cooperative advertising with retailers were not large, even though retail advertising held up somewhat better than national. Radio sets were sold during the thirties without the support of a substantial quantity of either manufacturers' brand advertising or retail advertising. [46]

Changes in National Newspaper Advertising INDUSTRIAL PRODUCTS. The so-called "industrial" classiScation, which contains a substantial amount of institutional advertising, fell from $29 million in 1929 to a low of $5 million in 1933, and in 1941 had recovered to only $18 million. In the war period, however, this advertising classification had a spectacular rise, a truly war phenomenon. Newspapers up to the time of the war experienced a downward trend in this classification at the expense of magazines and network radio, but enjoyed an important gain in the war period. H O T E L S , RESORTS, AND TRANSPORTATION. The classifications of hotels and resorts and transportation are presented together, since it was not possible to segregate them in the records for the earlier years. Between 1929 and 1941 there was an appreciable loss in the size of the pool of these classes of advertisers, from approximately $33 million to $18 million. Throughout, newspapers were the dominant medium, but they have lost relatively to magazines. Radio network never has been an important factor in this field. The loss of newspaper revenue for these classifications came primarily from the decrease in the size of the pool. W E A R I N G A P P A R E L . National advertisers of wearing apparel have been predominantly magazine advertisers throughout the period studied. Newspapers enjoyed an appreciable volume in this category in 1929, having had about one-third of a $ 1 3 million pool. The volume fell away sharply in 1933, and newspapers never regained their volume, although the pool itself came back to a new high. Newspapers' percentage fell to 1 0 % in 1941. General magazines were the chief gainers in the competitive battle. CONFECTIONS. It was possible to segregate a record of this pool only from the year 1935. Between 1935 and 1941 newspapers lost relative position mostly to radio, although magazines over the period improved their position in a pool that decreased from somewhat over $6 million to $5 million. O T H E R PRODUCTS. Sporting goods since 1929 have been predominantly a magazine classification. Since the advertising appropriations for companies in this group are relatively small, network radio has never been an important factor. Magazines throughout have re-

[47]

National Advertising in Newspapers ceived from 75% to about 90% of a pool that has varied between $1.5 million to $5.5 million. Until the war, newspapers pretty steadily held about one-sixth of the business. It was not possible to segregate the expenditures for the three classifications, insurance, public utilities, and publications, prior to 1939. After 1939, however, magazines held a steady position as first place medium for insurance companies, taking some 60% to 65% of a pool ranging from $5 million to $6 million. Radio network claimed from 10% to 13% of the pool, and newspapers steadily held to 25% of the pool. Advertising of public utilities, with a pool which in the years just before the war ranged from $7 million to $8 million, was dominated by newspapers, which had about 80% of the business. Magazines accounted for about 15%, and radio from 5% to 8%. Publications in the period from 1939 on have put about 75% of a pool of $8 million to $9 million in newspapers; magazines have had about 20%; while radio has had only some 3% to 4%. The Trend of Expenditures in Outdoor Advertising No SATISFACTORY data were available to show the trends of expenditure of various classes of national advertisers in the outdoor medium, which, with dollar volume estimated at $35 million in the relatively low year of 1935,1 and $65 million in 1941, is one of the more important media not included in the advertising pools studied. However, from a study of the Printers' ln\ indexes charted in Exhibit 4, p. 34, it would appear that since 1936 the outdoor medium has made relatively greater advances in national advertising income than have newspapers. In interpreting the Printers' ln\ indexes for the various media, the reader should keep in mind that both local and national advertising expenditures are included in the indexes. Newspaper advertising is over two-thirds local, whereas outdoor advertising is predominantly national. The outdoor index therefore can be taken as reflecting without substantial error the national advertising expenditures in that medium, whereas the newspaper index does not fully reflect the lost position in national newspaper advertising, which has been greater than the loss in local advertising. Outdoor advertising lost ground relatively much more than did newspapers during the early depression period from 1930 to 1936.

[48]

Changes in National Newspaper Advertising Then outdoor advertising made a better comeback than newspapers. Thus outdoor advertising in the recent period has fared better relatively than have newspapers at the hands of national advertisers. During this recent period the outdoor advertising industry made strides in providing advertisers with better evidence of the medium's circulation through establishment of the Traffic Audit Bureau. Moreover, from the reports of several advertisers upon whom we called, it has materially improved both its service and its selling to advertisers.

Concentration of Radio Network Advertising among Large Advertisers THE inroads of radio network advertising on newspapers and magazines have been characterized by a high degree of concentration, not alone among certain product categories, as indicated in the preceding pages, but also among a relatively few large advertisers. That there should be this concentration among advertisers with large appropriations is understandable from the character of the medium. It takes a large appropriation to be a network advertiser. Time must be purchased in cycles of 13 weeks. Advertisers generally have felt it advisable to continue a program for periods longer than this minimum in order to build audiences; and in time many advertisers have come to retain their hours as valuable franchises. Hence they have tended to be continuous radio advertisers. Again, the networks have grown in size and the number of stations used under a generous discount system have increased. Consequently network time costs have increased until in recent years an evening half hour on the leading networks has cost in excess of $10,000 and a daytime hour half that amount. On top of time costs are talent costs which, from such evidence as could be gathered, have become over the years an increasingly larger percentage of net time costs. In 1935, extensive inquiry indicated that network talent costs were on the average probably 40% of time costs.2 A n educated guess from comparing estimates of talent costs of advertisers with their time costs indicates that in recent years 50% is probably a conservative average for all network advertisers. The range of such expenditures has varied widely, of course, from as low as 1 0 % for certain daytime serials to well over 100% for some big-name variety programs. The expected concentration of radio usage among large adver[49]

National Advertising in Newspapers tisers is borne out in tables of radio time purchases. In 1940, 75 advertisers accounted for 91 % of network expenditures (Exhibit 7, p. 5 1 ) . Of these 75, the average gross expenditure for time for each was in excess of a million dollars. One hundred eighty-nine national advertisers used networks in that year, and the average gross time expenditure for each was in the neighborhood of $500,000. While gross time expenditures are an overstatement of actual time costs incurred, allowance for talent would more than offset this overstatement and would indicate a still larger average outlay than $500,000. In view of the continuing trend to network radio after the start of World War II, the number of network advertisers was 310 8 in 1944, as compared with 189 in 1941. This larger figure is, however, still a relatively small number of advertisers. Moreover, it is not likely to increase unless in the postwar period, with the anticipated increase in frequency modulation stations, there occurs an increase in the number of networks to accommodate additional advertisers. In 1944 and 1945 practically all desirable hours were sold. The degree of concentration of expenditures among large advertisers is far less for newspapers and for magazines than for radio. In 1940 it took some 650 national advertisers to account for 85% of newspapers' volume, and 705 advertisers to account for 87% of magazines' volume. The figures of average expenditure for newspaper advertisers and for magazine advertisers are far lower than for radio, for the numbers of advertisers in these media run into the thousands. When attention is limited to the advertisers spending over $25,000 each in either medium, the average for newspapers was somewhat over $200,000 in 1940 and somewhat less than $200,000 for magazines. T h e corresponding figure for radio network for that year was approximately $650,000. A study of the media usage of these large advertisers in records of Publishers' Information Bureau and Media Records, Inc., quickly reveals that for a large number the shifts have been primarily to radio. Their advent into network radio with its requirement of large expenditure has resulted in their using reduced linage in newspaper campaigns and marked curtailment in the number of markets on their newspaper lists. Use of national spot radio is not limited to so small a number of advertisers as is network radio. Publishers' Information Bureau listed approximately 1,100 national spot radio purchasers for the 145 sta-

[50]

Changes in National Newspaper

^ § I s £ g-vg s 5 ff-β Ι» ε 0 O O O 0 0 O •ϊ" δ. 0 O O O 0 0 0 ΙΛ Ν ΙΛΟΟ h) rn ?O Γ H V ftΛ rîM ΟMΟ in M r*-) >η "«ς M Η.

o .5 "ü- -α On G ì3" I s o 0 .β

Advertising

•2 υ S

& >

Ν (Λ bo Β

m

-S Χ ~

ΟΟ Ι Λ β o Η Μ «1 Ν

ο

2

ϊ«,! S « έ

1